Is mediation required for disputes involving Alloy before arbitration can be initiated?
Alloy Franchise · 2025 FDDAnswer from 2025 FDD Document
A. Mediation; Arbitration.
- (i) Except for disputes that involve injunctive relief or specific performance actions covered under subparagraph 12.B and prior to either party filing arbitration, the parties agree to mediate any dispute between you and us or any of our or your affiliates, including, without limitation, your owners and guarantors, arising under, out of, in connection with or in relation to this Agreement, or the Facility or Authorized Location, the parties' relationship, or the business; provided that the party seeking mediation must notify the other party of its intent to mediate prior to the termination of this Agreement.
Mediation will be conducted in the county in which our headquarters are then located (currently, Roswell, Georgia), or at such other place as may be mutually agreeable to the parties, by a mediator or mediation program agreed to by the parties.
Persons authorized to settle the dispute must attend any mediation session.
The parties agree to participate in the mediation proceedings in good faith with the intention of resolving the dispute if at all possible within 30 days of the notice from the party seeking to initiate the mediation procedures.
If not resolved within 30 days, or if one party refuses to participate in mediation as outlined herein, the parties are free to pursue arbitration.
Mediation is a compromise negotiation for purposes of the federal and state rules of evidence, and the entire process is confidential.
The parties agree that each party will pay fifty percent (50%) of the total of mediation fees and all costs associated with mediation.
- (ii) Except as qualified below in subparagraph 12.B and subject to the mediation obligation set forth above, any dispute between you and us or any of our or your affiliates arising under, out of, in connection with or in relation to this Agreement, the parties' relationship, or your Facility or Facility must be submitted to binding arbitration under the authority of the Federal Arbitration Act and must be determined by arbitration administered by the American Arbitration Association pursuant to its then-current commercial arbitration rules and procedures.
Source: Item 23 — RECEIPTS (FDD pages 69–245)
What This Means (2025 FDD)
According to Alloy's 2025 Franchise Disclosure Document, mediation is generally required before initiating arbitration, with certain exceptions. Specifically, before either party can file for arbitration, they must first attempt to mediate any dispute arising from the Franchise Agreement, the relationship between the parties, or the business operations. The party seeking mediation must notify the other party of their intent before the termination of the agreement. This mediation should occur in the county where Alloy's headquarters are located, which is currently Roswell, Georgia, unless both parties agree to another location.
The FDD specifies that authorized individuals with the power to settle the dispute must attend the mediation sessions. Both parties are expected to participate in good faith, aiming to resolve the dispute within 30 days of the initial notice. If the dispute remains unresolved after this period, or if one party refuses to participate in mediation, the parties are then free to pursue arbitration. The costs associated with mediation, including fees, are to be shared equally between the parties.
However, there are exceptions to this mediation requirement. Disputes that involve requests for injunctive relief or specific performance actions do not require mediation before arbitration can be pursued. In these specific cases, the franchisee or Alloy can proceed directly to arbitration without first engaging in mediation. This exception is important for situations where immediate action is necessary to prevent harm or enforce contractual obligations.
It is important for prospective Alloy franchisees to understand this dispute resolution process, including the circumstances under which mediation can be bypassed. Franchisees should also note that the mediation process is considered confidential, and any negotiations or discussions during mediation are not admissible as evidence in later legal proceedings.